Tax Exemption for Work Performed Abroad: Spain’s €60,100 Allowance Explained (2025 Guide)

If you’re a tax resident in Spain but work (partially or fully) for a foreign employer, there’s a generous tax exemption you should know about. Spain currently offers an exemption of up to €60,100 per year on employment income earned outside its borders—under specific conditions.

Here’s everything you need to know about making the most of this benefit in 2025.

What Is the €60,100 Tax-Free Allowance?

Spain allows residents performing work abroad to exclude up to €60,100 of foreign-earned employment income from Spanish income tax, provided certain rules are met 

Here’s what needs to apply:

1. You must be a Spanish tax resident (e.g., living in Spain for over 183 days).
2. The employer is foreign, or a foreign permanent establishment of a Spanish business.
3. The work is performed outside of Spain, and the foreign country is not considered a tax haven.
4. The foreign country applies a tax similar to Spanish income tax, often presumed valid if a double tax treaty exists.

If your foreign income exceeds €60,100, the exemption applies just to that amount. Any excess is taxed normally in Spain. Any foreign taxes paid on the exempt portion cannot be re-credited in Spain, but taxes paid on excess income can be off-set according to the relevant double taxation agreement.

Why This Matters in 2025

Strategic Tax Planning

If you’re a remote worker—especially freelancers, consultants, or employees abroad—this exemption can offer significant savings. The exempt income is not included in calculating progressive tax rates, meaning your other income benefits from lower brackets. Essentially, exempt income doesn’t raise your overall Spanish tax rate.

Legal Confirmation

A recent update clarifies that work performed during travel days abroad—such as commuting—counts toward the exemption. This aligns with a 2021 Supreme Court decision, which Spain follows in interpreting “work performed abroad” inclusively 

Eligibility Checklist

To qualify in 2025, ensure:

• Residency: You’re a Spanish tax resident (183+ days or economic center in Spain).
• Foreign Employer: You’re contracted to a company or entity not headquartered in Spain, or a foreign PE of one.
• Location of Work: Performed outside Spain and not in a blacklisted tax haven.
• Foreign Taxation: The host country imposes a comparable income tax, or an existing double tax agreement applies.
• Application Proportionally: If income is earned both inside and outside Spain, pro rata the exemption accordingly.

Practical Examples

• Scenario A – Fully Exempt
  Emma, a Spanish resident, works from Spain for a U.S. tech firm. She splits her time between Spain and the U.S. She qualifies for the tax exemption on her U.S-based income—reducing her Spanish tax bill significantly.
• Scenario B – Prorated Exemption
  James works for a UK company, spending half his time in Spain and half in the UK. Only the income from days worked in the UK counts toward the €60,100 allowance—applied on a prorated basis.
• Scenario C – No Double Credits on Exempt Income
  Maria exceeds the €60,100 threshold, and the UK taxes all her income. Spain accepts the exemption on the first €60,100 but only allows a tax credit for UK tax paid on the portion exceeding that threshold.

How to Apply It

1. File your Spanish tax return (Modelo 100) and exclude all foreign employment income up to the limit if you fulfil the criteria.
2. If you exceed the limit, apply the tax credit for foreign tax paid only on the excess portion.
3. Keep proof of foreign employment, tax residency, and foreign tax paid.

Final Thoughts

Spain’s annual €60,100 tax exemption on foreign-earned employment income remains one of the most generous incentives for remote and international workers residing in Spain. In 2025, this exemption continues to offer a smart tax planning tool—especially for freelancers, consultants, and digital nomads.

For tailored support and precise guidance on applying this rule, visit our blog or contact Taxadora. Let us help you optimize your tax outcome while staying fully compliant with Spanish rules.